EMIR

Legal Entity Identifiers

All UK counterparties that enter into derivative trades will need to have a Legal Entity Identifier (“LEI”) in order to meet reporting obligations.

An LEI is a 20-character code that uniquely identifies entities who participate on the financial markets.

CFI

All reports require a Classification of Financial Instrument (“CFI”) Code.  The CFI is a six-character code used to classify a financial instrument, as defined in ISO 10962.

Who does EMIR apply to?

EMIR applies to any entity established in the European Union (“EU”) that has entered into a derivative contract, and applies indirectly to non-EU counterparties trading with EU parties. EMIR recognises two (2) main counterparties to a derivatives contract:

• Financial counterparties – investment firms, fund managers, banks, insurers etc.
• Non-Financial counterparties – entities not involved in financial services.

What needs to be reported and to whom?

Financial and non-financial firms trading in derivatives must report details of all derivatives trades via a TR. This includes all the details of trades and any event thereafter that affects the valuation or the terms of the trade.  It also includes identification of the country of the counterparty (country of incorporation for legal entities, country of residence for natural persons).  EMIR covers OTC derivatives and exchange-traded derivatives.

Any derivative contract is required to be reported under EMIR reporting requirements, and includes:

• Financial derivatives settled physically or in cash;
• Commodity derivatives that must or may be cash settled
• Physically settled commodity derivatives that are traded on a regulated market
• Physically settled commodity derivatives that have characteristics of other derivative financial instruments

The definition of a derivative contract is based on the Markets in Financial Instruments Directive (“MiFID”).

When do reports have to be made?

Reports are required to be submitted to a registered TR no later than one working day after the trade has been made.

What is the revised EMIR RTS and ITS?

In November 2017, the revised Regulatory Technical Standards (“RTS”) and Implementing Technical Standards (“ITS”) began to apply. The changes made by the RTS and ITS to EMIR include addition of reportable instrument classes, increase in the number of reporting fields, changes to collateral reporting and introduction of the requirement to report CFI codes.

Firms that use TRAction Fintech for their EMIR reporting find they save time and money in complying with their regulatory requirements.  We would be happy to talk to you about how we can help to simplify your EMIR reporting requirements, contact us on +44 20 8050 1317 in the UK or +61 2 8960 7248 in Australia.